Slate Money – "The Hot Mess Edition"

Date: October 15, 2016
Host: Felix Salmon
Guests: Cathy O’Neil, Jordan Weissmann, Tim Harford

Episode Overview

This "Hot Mess Edition" of Slate Money explores the virtues of embracing disorder and randomness in life, work, and business. The episode features acclaimed economist and author Tim Harford, whose new book "Messy: The Power of Disorder to Transform Our Lives" is at the heart of the discussion. The panel also tackles the week’s major economics stories: Warren Buffett’s tax revelations, the limits of optimization (especially with taxes), and a deep dive into the 2016 Nobel Prize in Economics.

Key Discussion Points & Insights

1. The Value of Messiness and Disorder

• [03:15–11:15]
  Tim Harford introduces the theme of his new book, arguing that creativity and resilience thrive in environments that tolerate (and sometimes encourage) disorder. The panel shares personal experiences about organization (or lack thereof), and challenges conventional wisdom about optimization and tidy systems.
• Harford’s main argument:

  "You can't get [creativity and spontaneity] unless you're willing to tolerate a bit of mess." (Tim Harford, 03:29)

• The group discusses the “Inbox Zero” obsession, noting research that shows elaborate digital filing systems rarely outperform simply searching through a messy pile.
• Harford cites research by Steve Whittaker, demonstrating that "filers" often end up less in control of their information than "pilers."

  "If you just use the search bar, it's just as quick... You didn't waste all your time building these elaborate structures of folders." (Harford, 06:32)

• Optimization gone awry: Modern culture’s relentless pursuit of efficiency and optimization can make us less adaptable, less creative, and, sometimes, less productive.

2. Randomness, Creativity, and Innovation

• [11:17–14:41] The discussion moves to the use of deliberate randomness as a creative tool, referencing Brian Eno and his work with David Bowie and the “Oblique Strategies” cards.
• Harford offers practical advice for injecting purposeful randomness into everyday life (e.g., rolling dice to try new things on weekends), and highlights how working with people who think differently naturally introduces productive disorder.
• Quote:

  "The ultimate source of mess in our lives... is other people." (Harford, 12:51)

• Felix likens real journalism and investigative reporting to “messy” processes—wasteful in appearance, yet crucial for producing game-changing work.

3. Over-Optimization in Society — Case Studies

• [14:41–16:42] Cathy O’Neil links the discussion to academia, where growing pressure to quantify research output is potentially stifling creativity.

"You should have... this concept of waste is okay. Like if you try something for six years and it doesn’t work out, that’s okay.” (O’Neil, 15:01)

4. Warren Buffett’s Tax Disclosure and Tax Optimization

• [16:43–24:55]
• For the first time, details of Warren Buffett’s personal taxes are public:
  • 2015 taxes paid: $3.82M on $11.56M of taxable income (33% rate), having given over $2.8B to charity.
• Felix’s nuanced reaction:

  "As a percentage of his wealth, it's just zero, basically. And you're like, come on." (Felix, 20:38)

• Discussion of how Buffett pays relatively little personal tax due to lack of dividends from Berkshire Hathaway and structuring wealth through stock holdings.
• Debate on whether large-scale charitable giving should reduce tax liability, and whether US tax laws should be reformed to tax wealth instead of (or in addition to) income.
• Jordan points out:

  "Buffett actually may be... a living example of how that [avoiding corporate tax via stockpiling wealth in a corporation] can unfold." (Jordan, 22:48)

5. Tax Culture and Policy in the US

• [24:56–29:32]
• The hosts discuss the American obsession with optimizing taxes, its psychological and societal costs, and the unintended consequences.
• Cathy O’Neil introduces her “U-shaped curve” of time spent thinking about money; both the poor and the very wealthy obsess, while the middle class worries less.

  "Money's actually really boring... living in that sweet spot in the middle of the U where you're like, I think about money... but I would like to minimize that." (O’Neil, 24:58)

• Discussion about the predatory nature of the tax prep industry and how complicated filing hurts most Americans.
• Harford tasks Jordan with researching which country has the best tax system—Scandinavia is cited for transparency (with tax returns being public but “Facebook stalked”—the subject is notified when someone looks up their return).

6. Nobel Prize in Economics — Insights & Contract Theory

• [29:32–40:49]
• Tim Harford explains the work of 2016 prizewinners Oliver Hart and Bengt Holmstrom:
  • Focus: “Contracting and incentives,” or how to create effective contracts where not everything can be perfectly specified in advance.
• He uses the example of why a company (like Salesforce) might want to buy Twitter instead of just forming a contract:

  "If Twitter needs to change in ways that can't easily be contracted, then the solution is for Salesforce to take control over it." (Harford, 34:00)

• Discussion of residual control rights – when unpredictable events occur, who gets to make the final decisions?
• Holmstrom’s incentive theory: If only easy-to-measure outcomes are rewarded, workers will ignore valuable but hard-to-measure contributions:

  "If you only set it up to do the one that is easy to measure... then they're going to end up only doing that one thing." (O’Neil, quoting Suresh Naidu, 37:14)

• Holmstrom’s solution: Incentives must be “vague”—incorporating both quantifiable results and subjective judgment, which is why white-collar compensation is often fuzzy.
• The group talks about the real-world implications, such as in education and CEO pay.

  “Holmstrom’s work shows us why... vagueness is often exactly what you want.” (Harford, 38:44)

Notable Quotes & Memorable Moments

• On the paradox of optimization:

  "Are we going to use the phrase local maxima here?" (Felix, 08:34)
  “We just did.” (Harford, 08:37)
  [Laughter]

• On Buffett’s charity vs. taxes:

  "He gave 24,000% of his taxable income to charity in 2015." (Felix, 19:17)

• On female economics Nobel laureates:

  "Zero. That is the number of Nobel Memorial Prizes in economics that have been awarded to female economists." (Tim Harford, 41:19)

• On the pervasiveness of herpes, in the Numbers Round:

  "885,169,400, which... is the number of cases of genital herpes found worldwide last year." (Felix, 44:09)

Numbers Round (Highlights)

[41:12–46:17]

• Tim Harford: 0 (number of female economists awarded the economics Nobel)
• Cathy O’Neil: 1.4 million (Americans at risk of losing Obamacare coverage due to insurer exits)
• Felix Salmon: 885,169,400 (worldwide genital herpes cases in 2015, per new research)
• Jordan Weissmann: 65 million (price paid for the Empire State Building in 1961—a segue to a tribute to his grandfather, who helped negotiate the deal)

Important Timestamps

• 00:08: Episode intro, introductions
• 01:05: Tim Harford introduces "Messy"
• 03:15–11:15: Discussion of messiness, organization, optimization
• 16:43–24:55: Deep dive into Buffett’s taxes and broader tax policy
• 29:32–40:49: Nobel Prize, contract theory, incentives
• 41:12–46:17: Numbers Round

Final Thoughts

The episode is a celebration of how embracing disorder can fuel creativity, adaptability, and even productivity—challenging the myth that optimization and order are always desirable. The lively discussion showcases how these ideas play out not just in theoretical economics, but in everyday life (from jazz to email to taxes). The group closes with thought-provoking takes on tax fairness, economic incentives, and the ongoing gender gap at the highest levels of the field.

Memorable for its energy, humor, and intelligence, this episode of Slate Money is a must-listen for anyone curious about the intersection of economics, business, and the messiness of real life.